Boeing, lawmakers cheer S. Korea's plans to buy F-15s

ST. LOUIS -- For a company still smarting from losing the huge Joint Strike Fighter contract, the news Friday out of South Korea couldn't have been more welcomed by Jerry Daniels, the Boeing Co. military division he heads, and Missouri lawmakers.

Boeing, South Korea's defense ministry announced, gets a $4.5 billion deal to build 40 F-15K fighter jets for the Asian country's air force by 2009. The deal keeps the fighter's beleaguered production line open at Boeing's St. Louis military aircraft site and preserves at least 1,000 local jobs.

Pop go the champagne corks.

"This is a great shot in the arm, a great boost in morale to a team that could sure use the victory at this time," said Daniels, president and chief executive of Boeing Military Aircraft and Missile Systems. "The last thing we needed was to have a loss."

Bottom line: "We're absolutely thrilled and couldn't be prouder."

To Daniels, winning an international bidding war for the South Korean contract took some of the sting out of Boeing's failure last year to land the largest Pentagon contract in history -- the $200 billion Joint Strike Fighter project that went to rival Lockheed Martin Corp.

That setback clouded the long-term future of jet fighter production in St. Louis just weeks after the Sept. 11 terrorist attacks had decimated orders in Boeing's commercial division. And just last month, the Defense Department said the Navy and Marine Corps might pare by about 18 percent the number of St. Louis-built F/A-18 "Super Hornets" they buy.

Special Pentagon order

Lately, the local Boeing production line has been working to build 10 jets -- a Pentagon order engineered by U.S. Sen. Kit Bond and other Missouri federal lawmakers to largely keep the line open as the company jockeyed for the South Korean and other global business.

The South Korean deal, Daniels said, now extends for four years to 2008 the jobs of the 1,000 workers now building F-15s here. Boeing will deliver the first F-15K during 2005, the last in 2008, he said, expecting Boeing and South Korea to sign the contract within months.

"This is tremendously good news for Boeing workers," Bond said. As for South Korea, the Republican added, "I think they've got the best deal."

House Minority Leader Dick Gephardt, a St. Louis Democrat, called Friday's announcement "fantastic news for St. Louis" and the region, where Daniels said 125 companies do support work for the F-15, accounting for an additional 2,000 jobs.

'This changes things'

Richard Aboulafia, an aerospace analyst with The Teal Group, called Boeing's victory "a remarkable comeback" from a string of setbacks.

"After one dismal decade, it looks like they've got a golden one ahead," Aboulafia said. "This changes things. It's not just a Korean buy, but a rejuvenation of the entire system. There's a very strong revenue stream attached to this plane."

Gov. Bob Holden said the contract helps stem the state's decline of manufacturing jobs. Ford Motor Co. plans to shutter its assembly plant in Hazelwood, not far from the Boeing complex, eliminating more than 2,500 jobs by 2005.

In beating out finalist Rafale, made by the French firm Dassault, Boeing's F-15K prevailed because of South Korea's long-standing military alliance with the United States, South Korean military officials have said. About 37,000 U.S. troops are stationed in South Korea as a legacy of the 1950-53 Korean War, and South Korea has tried to ensure its new weapons systems are compatible with those of the United States.

As part of the contract, Boeing will hand over $880 million worth of technology and give various contracts totaling $2 billion for South Korean aircraft parts makers.

Daniels dismissed as sour grapes Dassault's claims that South Korea's defense ministry, among other things, adopted the playoff format for the contract as "a lifesaver for the U.S. competitor."

To Daniels, Boeing won the contract simply because its product was better.

"That's the best multi-role fighter that money can buy. Period. End of discussion," Daniels said. "It will carry almost as much ordnance as the Rafale weighs. I think the aircraft itself would carry the day."

Boeing, along with original contractor McDonnell Douglas, has built more than 1,500 F-15s, which serve with the U.S. Air Force and the militaries of Japan, Saudi Arabia, and Israel.